The Financial Authority of Singapore (MAS) revealed two session papers through its official web site on Oct. 26, highlighting regulatory measures for implementation relevant to digital fee token companies and stablecoin issuers.
The paper is predicated on the premise that crypto belongings are “inherently speculative and extremely dangerous “ and comes after the MAS’ concept of imposing an outright ban on the sector, in keeping with the watchdog.
At present, digital belongings similar to Bitcoin, Ether, Litecoin, Sprint, Monero, Ripple, and Zcash and stablecoins similar to USDT and USDC are handled as digital token tokens below the Cost Providers Act 2019 (PSA).
DPT service suppliers are regulated primarily for cash laundering and terrorism financing, know-how dangers, and the duty to offer danger warning disclosures to customers.
The analysis papers, titled “Consultation paper on proposed regulatory measures for digital payment token services“and “Consultation paper on proposed regulatory approach for stablecoin-related activities, “ suggest measures to construct on prime of the PSA.
Digital fee token companies
Within the paper regarding digital fee token companies, MAS proposes that DPTSPs ought to require clients to take a danger information evaluation take a look at earlier than accessing crypto companies and supply academic content material to customers on the dangers of DPT companies.
In keeping with the regulator, DPTSPs shouldn’t be allowed to supply financial or non-monetary incentives to clients or for the referral of their companies.
As well as, the watchdog proposed restrictions on debt-financed and leveraged DPT transactions, which suggests DPTSPs mustn’t present clients with a credit score facility for buying crypto or enter into leveraged crypto transactions with clients, nor ought to they settle for funds from retail clients utilizing a bank card to have interaction in transactions with any DPT companies.
Different vital measures embody obliging DPTSPs to segregate clients’ belongings from their reserves.
Regarding stablecoins, the regulator stated stablecoins fall below a number of classes — single-currency pegged stablecoins (SCS), algorithmic stablecoins, and stablecoins pegged to a basket of currencies.
The regulator proposed that stablecoin issuers grow to be topic to the identical anti-money laundering and terrorist financing necessities and know-how and cyber danger administration as all regulated fee service suppliers and banks.
This implies stablecoin issuers could be obligated to carry licenses, bear impartial attestations on a month-to-month foundation, and meet the minimal necessities to have a excessive worth of reserve belongings to again the issued SCS — at the least 100% of the par worth to the excellent SCS in circulation always and solely within the type of money, money equal or debt securities issued by the central financial institution of the pegged foreign money.
The watchdog additionally proposed permitting solely stablecoins pegged to the Singapore greenback or Group of Ten (G10) currencies, such because the U.S. greenback and the euro.